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Risk and compliance implications of AI in the Insurance Industry
One day in 1975, a Kodak engineer decided not to embrace a prospective new digital technology, thereby sealing the fate of the world’s leading photography company. As insurance executives consider artificial intelligence (AI) and the question of whether to use this technology, they would do well to remember this decisive strategic mistake.
AI could be one of the biggest game changers in insurance history and undoubtedly constitutes a paradigm shift. It offers a wide range of opportunities: faster and more efficient claims management and application processes, better prospective healthcare advisory services, and a variety of on-demand insurance services. This boosts customer and stakeholder expectations and generates innovation pressure. At the same time, it is important to remember that the insurance sector is heavily regulated. This leads to tension between the constant drive to innovate and improve and prospective regulatory pitfalls, not to mention potential risk and compliance issues.
This article will explore the potential of AI technology and consider the implications of existing regulatory requirements and compliance risks for the usage of this technology. We will also look at a number of conflicting examples.